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Surplus of Used Cars Driving Down Prices

Strong new-car sales mean more trade-ins, boosting the supply of used vehicles. Discount financing lowers monthly payments for new cars, which means the price of used cars also has to decline to offer the price difference that buyers expect. And the sluggish economy has pushed car rental companies to trim inventories, putting yet more late-model vehicles on the used-car market.

What does this mean for consumers? If you are thinking about buying another car, you don't necessarily have to get rid of the one you have, according to the Fort Worth Star-Telegram. If the price for your present car is so low that you feel like you're giving it away, and you don't need the extra money for a down payment, having a second vehicle might be useful, the Star-Telegram said.

Paul Taylor, chief economist for the National Automobile Dealers Association (NADA), said there's been a steady rise in the number of vehicles per household. The strong economy of the 1990s led more people to own specialty vehicles, including classic cars, especially in suburban areas where there's room to store the extra vehicle.

In the past decade, the average number of vehicles per household rose from 1.6 to 1.85, Taylor said. He said the increase is probably understated because of the growing number of single-person households.